Credit cards are deeply integrated into the U.S economy and although they are a great way of avoiding cash transactions, they contribute to huge debt accumulation. Recent data indicates that the average American has four credit cards and the average total balance is $6,200. They also owe roughly $1,162 interest on that debt.
Accumulating too much debt can be dangerous if left unchecked and managing four credit cards can be a tall order. It is easier to clear the credit card debt if it is treated as one single loan and this is where credit card consolidation comes in. the best and most common way to consolidate your credit card debt is through balance transfer cards.
Debt consolidation through a balance transfer card
It is a type of credit card that accepts balance transfers from other credit cards that charge high interest rates. Balance transfer cards often provide lower interest rates, which is one of the main reasons why people apply for them. Think of it as debt restructuring where you can secure a longer payment duration for a lower interest rate, thus making it easier for you to repay the debt.
If you decide to apply for credit card consolidation, consider cards that offer as low interest rates as possible. Some of the best balance transfer cards out there include U.S. Bank Visa® Platinum Card, City Diamond Preferred Debit Card, Wells Fargo Platinum card, and City Double Cash Card among others.
Debt consolidation through loans
You might have to explore other means if your credit card balance is too big even for a balance transfer card. A poor credit score might also prevent you from going down the bank transfer route, thus consolidation through a loan is the next best option. It entails taking out a loan tailored for paying off your credit card debt and then you pay off the loan over a specified long-term duration. This option is ideal because it features a lower and fixed APR than that offered by credit cards.
Debt consolidation loans also allow you to drastically clear your credit card debt, thus helping to improve your credit score. You may also end up paying less per month than your previous monthly repayments for your credit card debt.